There is a myth about water in the Western U.S., which is that there is not enough of it. But those who deal closely with water will tell you this is false. There is water. It is just in the wrong places.
Cibola, Ariz., is one of the wrong places. Thanks to the Colorado River, which meanders through town of about 300 people, Cibola is a verdant oasis.
This scene is unlikely to last. A few years ago, a firm called Greenstone, a subsidiary of a subsidiary of the financial-services conglomerate MassMutual, quietly bought the rights to most of Cibola's water. Greenstone then moved to sell the water to one of the right places: Queen Creek, a fast-growing suburb of Phoenix 175 miles away, full of tract houses and backyard pools.
Much of the West was made by moving water. What is new is for private investors to exert that power.
"They're going to make big bucks off the water, and who's going to suffer?" said Holly Irwin, a county supervisor. "It's the rural counties going up against big money."
Grady Gammage Jr., a spokesman for Greenstone, said, "In my view there is enough water both to sustain a significant agricultural economy on the river and to support urban growth in central Arizona."
In the West, few issues carry the political charge of water. It can decide the fate of every part of the economy, from almond orchards to ski resorts to semiconductor factories. And with the worst drought in 1,500 years parching the region, water anxiety is at an all-time high.
As investor interest mounts, leaders of Southwestern states are beginning a 5-year process to decide the future of the Colorado River. Of all the accomplishments of moving and storing water in the West, none may be more impressive than a sparsely worded 13-page document called the Colorado River Compact. Drafted in 1922, it allocates the river's annual flow, dividing the water among seven states. Today, the river provides water to 40 million people and 5.5 million acres of farmland — not just in Colorado, Wyoming, Utah, New Mexico, Nevada, Arizona and California but also to 29 Native American tribes and the Mexican states of Sonora and Baja California.
"Back in the 1920s, they knew that if they didn't reach agreement, there were going to be winners and losers," said Russell George, who founded the Interbasin Compact Committee, a statewide governmental body. "Everybody gave a little; everybody got a little. And it had to be a pretty good process, because it lasted 100 years."
Most of the water in the 1,450-mile-long river comes from Colorado, and as that state's top water official from 2013 to 2017, James Eklund directed the creation of a comprehensive long-term plan to address climate change.
"Dealing with the threat of climate change to our water requires all sectors, public and private, working together," said Eklund, now legal counsel to hedge fund Water Asset Management.
To proponents of open markets, water is underpriced and overused. In theory, a market-based approach discourages wasteful low-value water uses, especially in agriculture, and creates incentives for private enterprise to become involved. Investors and the environment may benefit, but water will almost certainly be more expensive.
The interested players range from financial firms to university endowments to investor groups.
Matthew Diserio, president and co-founder of the hedge fund Water Asset Management, has called the U.S. water business "a trillion-dollar market opportunity."
Many see the Compact Committee as a safeguard isolating the river from the market. "The Western model is a sort of comprehensive, consensus-based public discussion, and it's worked very well," said Bruce Babbitt, a former governor and secretary of the interior during the Clinton administration. "My fear is that the speculators are going to break it. They're going to try to break up the system."